I thought the portion at the end with the analysis from the Asian Development Bank was the most interesting.
That’s weird, I don’t have a subscription
Zhang Wei, a 29-year-old male resident of Beijing, is at first glance an unlikely exemplar for the power of women in modern China. But hear him out. A junior executive at a state-owned energy company, Zhang has not yet been able to save enough money to afford a decent apartment in Beijing, where prices have pretty much gone straight up since he entered the workforce seven years ago. So Zhang says he saves nearly 30 percent of his salary every month and is hoping prices decline a bit so he can buy in the next year or two. “I am,” he concedes, “a little bit crazed by the idea.”
Why would a young professional male be obsessed with buying an apartment in a market a lot of people think is already overpriced? “Because,” he says, “I’d like to get married and start a family. My parents are really pressuring me. And if I don’t own an apartment, that’s really hard.’’
Cut to a fashionable restaurant in Shanghai, where four women—friends from college, also young professionals—are having a drink after work. They could be cast in the Chinese version of Sex and the City: All are single and in their late 20s or early 30s. Tell them the tale of the thrifty Zhang, and they all smile. “I wouldn’t even go out with a guy who didn’t own a house, never mind marry him,” says Hua Feng, triggering laughter from her friends, who then debate the pros and cons of Zhang, even though they’ve never met him.
Li is right. The reason young urban women in China these days are putting off marriage—working longer than they might have in the past, and earning more—is because they can. The simple fact is that they—not their male counterparts, like poor old Zhang in Beijing—are in the demographic driver’s seat in China, and they will be for years to come. For a generation now, the number of boys being born in China has greatly outstripped the number of girls. This gender imbalance reached a peak of 1.22 to 1 in 2008, and is now about 1.16 to 1. By 2020, the National State Population and Family Planning Commission projects that males of marrying age will outnumber females by at least 30 million.
Consider Cai Li (who asked her real name not be used in this article), a 34-year-old marketing executive in Shanghai: She is smart, engaging, hip and attractive. She is also the divorced mother of an 8-year-old girl. When she caught her husband, a Taiwanese businessman, philandering five years ago, she didn’t hesitate. “I divorced him as soon as I could,” she says. “He was shocked. He thought I wasn’t serious, that I wouldn’t do it because of our daughter. I said, ‘You’ll see.’ And within a week I had filed the papers [for divorce]. And why wouldn’t I? Why should I put up with that? I have parents here in Shanghai who help take care of my daughter. I had a good job. Plus, if I want to get remarried, it’s not as if there’s a shortage of men, even at my age, who would be interested. [My ex] was crazy to think I was going to stick around.’’
Indeed, even government officials acknowledge that the demographic chasm in China is playing a role in the steadily increasing rate of divorce—a trend especially evident in big cities like Shanghai. Nationwide, the divorce rate rose from just over 1 percent of couples in 2003 to 2.57 percent in 2013, the last year for which complete data is available. Though that is still very low by international standards, the divorce rate in urban areas, where women are far likelier to be able to support themselves, is much higher. Recent research suggests that divorce rates in Beijing and Shanghai are now over 30 percent.
The number of divorces is “going to continue to go up for the foreseeable future,” says Liu Xia, a former official in China’s Family Planning Commission, “partly because women now have more choices, economically and demographically.”
Wei Shang-Jin, a former professor at Columbia University, is now the chief economist at the Asian Development Bank. In 2009, he and co-author Xiaobo Zhang, in the paper, “The Competitive Saving Motive,” put forth a radical hypothesis as to why China’s savings rate was so high, and why it wasn’t coming down (as many economists have predicted it would). The high savings rate is hugely consequential. As Shang-Jin notes, China’s household savings rate affects everything from international capital flows, to its massive trade imbalance, to U.S. exports and therefore employment. Put simply, if Chinese consumers spent more and saved less, Beijing’s trading partners, the U.S. included, would sell more goods and services to them.
The standard economic story is that average Chinese save because of the absence of a solid social safety net, in particular a nationwide pension and health insurance system like Social Security and Medicare in the U.S. Wei is skeptical. He notes that in the past decade there has been significant improvement in both the national pension and health care systems. So he looked at data across several Chinese provinces that tried to correlate savings with gender imbalance. The results were striking. “We found that not only did households with sons save more than households with daughters on average, but that households with sons tend to raise their savings rate if they also happen to live in a region with a more skewed gender ratio,” Wei says.
The effect of that, he says, was even more pronounced than he expected. “Even those not competing in the marriage market must compete to buy housing, and make other significant purchases, thus pushing up the savings rate for all households.’’ To him the conclusion is inescapable. “None of the discussion about global imbalances has brought family-planning policy or women’s rights to the table, because many do not see these issues as related to economic policy. Our research suggests that this is a serious omission.’’
That’s what you get for barbaric government policies. And how many baby girls suffered?
^It’s only been around for like 35 years and they’ve been easing it lately.
This thread prompted me to look up some cost of living information on numbeo (not sure if the source is any good). Anyway, it looks like rent is cheap relative to home prices in Shanghai. Anything involving labor (meals, etc.) looks pretty cheap compared to NYC though.
I think the interesting takeaway from an investing standpoint is the possible alternate explanation for sticky savings rates.
I’m disappointed at the lack of inappropriate comments.
Ohai should be happy. Asian men will be forced to flood white women… with offers of marriage I mean. IIRC as of now women outnumber men in the West.
Turn the tables on evil white guys getting all the good Asian … cat … in US. 50% Asians in US marry outside of their race. The Tiger Mom even said there are enough families with Jewish husbands and Asian wives that she could join a group of them in her town. Who would have thunk.
I’ve heard girls in China can be ruthless in terms of marrying young (due to cultural stimga) but then bolting immediately when something better comes along (“trading up” in terms of wealth/status)
Its an odd culture over there. I spent three months in Beijing and was talking to a professor who casually said she ‘threw out’ her first baby because it was a girl. Luckily the next baby they had was a boy. I never asked what threw out meant specifically but it sure doesnt sound good.
You guys are talking like you think it’s ok to shame your family by raising girls. Who are you people??
I can understand (and possibly even buy into) the argument that “you have to drown baby girls because everybody’s on the brink of starvation anyway. And a girl won’t be able to work hard enough on the family rice farm to make enough food for herself to eat. Better for her to die now than everybody starve slowly.”
But if it’s a white collar family, or one that’s not on the brink of starvation (and I mean literal starvation), then how is it legal/ethical/toleratable to get rid of a baby girl? (I’m seriously looking for an answer here.)
How is it legal/toleratable for parents in the US or other countries to abort babies that have genetic deficiencies?
Abortion of female fetuses is probably legal. If that or other methods of baby dumping are not legal, the Chinese probably do it anyway. Ethical standards are based on cultural context. Which is more important - your family lineage or an individual member of the family, who is just going to die at some point anyway?
I only regret that an innocent thread about Chinese savings rates has descended into a heated discussion on abortion issues.
Are you surprised that human issues are more interesting than finance ones?
"It’s all personal, every bit of business. "
Well done, sir.
It’s more of an heir thing. Marriage means that the man’s last name is taken, therefore continuing your lineage.
Yep because there is a large variety of last names in that culture… Is it racist to say chinese all look alike? I wonder if Chinese people think people of other races all look alike as well…